BtoB: How will materials and labor shortages exacerbated by the hurricanes and overseas construction affect U.S. suppliers?
Weatherhead: [Hurricanes] Katrina and Rita have taken a serious bite out of our natural gas supply, cement production/delivery and oil production. The result will be felt for months to come but especially this winter when the cost of gas heat at least doubles. More than 85% of all construction goods are transported by truck. Freight companies can't afford to absorb these cost increases for long. They will be passed on to manufacturers, suppliers and consumers. China's growth has slowed, but it is still consuming huge quantities of global materials, especially steel and fuel. Add to this last December's tsunami and the recent three-country earthquake and the need for materials, equipment and other supplies will continue to intensify.
BtoB: Is there any way for suppliers to find opportunities in the shortages?
Weatherhead: Probably the greatest advantage would be for suppliers that can guarantee a price for a fixed period of time into the future. Most marketers would do well to stand behind pricing commitments, as well as meeting delivery schedules. Contractors will repay this type of service with long-term loyalty. Not long ago a project manager told me that even though the company had bid a major bridge project more than two years ahead of construction they had gotten steel quotes. When it came time for delivery, the steel supplier stuck with the quoted prices ... He wasn't going to gouge. Being fair in pricing is going to be critical. Manufacturers that can deliver quality used products will do well to back the used equipment with a solid warranty program. This will keep contractors coming back.
BtoB: What marketing strategies should suppliers use to reach and engage construction companies?
Weatherhead: The best way to reach the construction audience is a combination of national and regional ads and promotions. Too often when the order board is full for months into the future, manufacturers and suppliers will cut advertising programs feeling that they have no need to market aggressively. This is a good way to lose mind share that is just as important as is market share.
BtoB: Are there any particular products, services and benefits that marketers should be looking into?
Weatherhead: Products that can improve job site efficiencies and reduce the need for labor are becoming more essential. For example, Global Positioning System machine control systems are a hot product because they can make a poor [machine] operator an expert, and save contractors anywhere from 30% to 60% in materials costs and man-hours.